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Local Advertising: Lessons for All Video Advertisers Posted August 18th, 2008 by Michael Shehan

Just how in the world will local online video advertising become a $1.5 billion industry (according to The Kelsey Group’s US Local Video Forecast – 2007 – 2012 Report) in just a few years after only generating $11 million in 2007? Local advertisers are generally not the most sophisticated brand marketers on the planet. Most don’t know what CPM stands for, and fewer would agree to pay on a CPM basis. Therefore, one would seemingly conclude that local video advertising, largely billed as a branding medium, would not grow as quickly as projected. However this was roughly the same argument when search marketing began to reach critical mass. Local advertisers surely weren’t going to pay per click to drive visitors to their site; and yet, local search marketing has become one of the most competitive and largest segments of sponsored search. If history is any guide, local search offers some very important lessons that can be applied to all forms of video advertising – from brand to direct response campaigns.

First Lesson: Engage Everyone, Measure Everything

Small to medium-sized businesses (SMBs) typically use marketing companies, like Dex Media and Reach Local, for online and sometimes offline promotions. These companies employ sophisticated campaign management practices and technologies that allow them to arbitrage traffic from large search players like Google and Yahoo. These players can often justify the cost of paying per click by providing every means possible to engage the consumer and to measure such engagement. It’s not about brand recall, although that is a major benefit. It’s about interactions, whether it’s a phone call, an email, a filled out form, a coupon or a visit to a dynamic Web site. It’s foolish to assume all consumers want only one way to engage with a business. I hate talking on the phone, so I order online. My mom hates to order online, so she calls a live person. And my dad prefers to go to the store. Knowing that, local advertisers provide every opportunity to interact with the consumer. In addition to typical impression and post click behavioral tracking, online video advertisers might also want to consider the following tactics:

• Unique Phone Tracking Numbers – We have found that overlaying the video ads and companion banner units with unique phone tracking numbers is a remarkably effective way to not only generate call volume, but also to track the quality of your traffic sources. You can obtain call tracking numbers from companies like Ingenio, Marchex, and Telmetrics. Most of the time, these providers will report the caller’s name, address, phone number, time of call, length of call, and some even record the call for you so you can measure lead quality.

• Push to Talk – This nifty feature allows consumers to request that the business contact them. The consumer types in their phone number in a form and they hit the ‘push to talk’ button. The business is then notified to contact the interested customer. As always, the push to talk lead is tracked back to the traffic source.

• Dynamic Sites – Many local advertisers have dynamic Web sites that change elements of the site, like phone numbers and tracking ID, based on who is sending the traffic to their site, once again allowing them to track the lead source. For instance, the unique call tracking number found on the video ad and banners will match with the phone number on the dynamic site.

• Request for More Information Forms – Many local advertisers’ Web sites encourage consumers to fill out a form to receive more information. Again, all is tracked back to the traffic source.

• Coupons – To drive foot traffic and orders, local advertisers are masters at offering up an incentive. For video advertisers, it can be as simple as saying in your ad, “mention this ad and you’ll get…” or having your companion banner direct people to a printable discount coupon.

Second Lesson: Optimize, Re-optimize, Then Re-optimize Again

Local search advertisers employ a constant cycle of measurement and optimization. Better performing sources of traffic get prioritized, while wasteful sources are automatically pruned from the plan.

While video advertising isn’t as automated as some would hope, some networks and exchanges will allow you to optimize your campaign on the fly as you measure conversions. For instance, one company did a campaign for an auto parts store in a small suburb of Minneapolis. After targeting the Minneapolis DMA coupled with contextual targets of local news, sports, and automobiles, the campaign did OK, but the performance would not justify a sustained campaign. The advertiser optimized the campaign to target only automotive content and to target the neighborhood where the auto parts store was located. This dramatically lowered the number of video impressions served to just 1,000 in one month. However the campaign drove a significantly higher percentage of Web site visits, filled-out forms, and calls to the store at a lower cost to the advertiser.

Third Lesson: It’s the eCPM, Stupid!

The arbitrageurs of local advertising are remarkable in that they will work with any traffic source regardless of the payment model-CPM, CPA or CPC. By understanding and attributing a value to certain interactions with their consumers, whether they are phone calls or filled-out forms, they can always assess the value of a traffic source to quickly determine if it’s worth it to them. If a cost per click campaign doesn’t offset the cost to generate their desired engagement metrics, then they will shift ad budget somewhere else that can, even if it means paying on a CPM basis.

We’ve found that local video ads can even outperform branded campaigns paying on a CPM basis when these campaigns are properly targeted, measured and optimized. For instance, in the above auto parts store example, those 1,000 impressions generated 40 visitors to the site and four phone calls, thereby generating traffic worth over $50 eCPM to them.

So what can brands learn from local video advertising? No, not to move to performance-based advertising. I don’t think anyone is going to buy a box of mac and cheese online. However inviting consumers to interact on multiple fronts can help easily quantify which traffic sources are most engaging and cost effective. For mac and cheese, potential measurable interactions could be downloading a recipe, printing a coupon, or participating in a survey.

Perhaps if the industry were to more widely adopt the sophisticated tactics found in local search advertising, one could actually argue that local online video advertising could be much larger than the Kelsey Group has projected!

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